No GASB statement sets a capitalization threshold. GFOA recommends a minimum of $5,000 per individual item, applied per item rather than per group unless that would exclude a significant class; federal awards define equipment at $10,000 per unit from 1 October 2024. Infrastructure can be reported without depreciation under the modified approach if the government meets the conditions in GASB 34.
GASB sets no threshold; GFOA recommends $5,000 per item.
No GASB statement prescribes a capitalization threshold. The Government Finance Officers Association's best practice, Capitalization Thresholds for Capital Assets, recommends a minimum threshold of $5,000 for any individual item, applied to individual items rather than to groups of similar items, unless applying it per item would exclude a significant portion of capital assets (the example given is the books of a library district), and reminds recipients of federal awards to be aware of the federal threshold requirements. The federal Uniform Guidance, 2 CFR 200.1, defines equipment as tangible personal property with a unit cost of $10,000 or more (or the recipient's own lower threshold) for awards issued on or after 1 October 2024, raised from $5,000. A government that sets $5,000 for its own statements and tracks federally funded equipment from $10,000 meets both.
A threshold too low is a record-keeping burden; too high, a misstatement.
The threshold decides what the note in the financial statements shows and what the auditor inspects. Set at $500, it fills the register with chairs and printers that cost more to track than they are worth; set at $50,000, it leaves vehicles and equipment out of the capital-asset note and understates the government's position. The policy states the threshold by class (land and buildings are usually capitalised at any cost; equipment at the threshold; infrastructure by network), how similar items bought together are treated, and how improvements are distinguished from maintenance. The capitalization thresholds article covers the tax and GAAP side of the same question.
Infrastructure can be reported without depreciation, on conditions.
GASB Statement 34, paragraphs 23 to 25, allows eligible infrastructure assets (roads, bridges, water and sewer systems, and similar networks) to be reported under the modified approach, without depreciation, if the government manages them with an asset management system and documents that they are being preserved at a condition level it has established. Preservation costs are then expensed and additions and improvements are capitalised. The conditions are demanding and the disclosures are required supplementary information; a government that stops meeting them returns to depreciation.
| Requirement of the modified approach | What the government has to show |
|---|---|
| An asset management system with an up-to-date inventory of eligible infrastructure | The register, with every road segment, bridge and main by network or subsystem |
| Condition assessments at least every three years, on a documented, replicable scale | The assessment date and rating on each asset or segment |
| An estimate each year of the annual amount needed to maintain and preserve the assets at the condition level the government has established | The preservation budget, by network, with the established condition level |
| Documentation that the assets are being preserved at or above that level | Required supplementary information: condition ratings for the last three assessments and the estimated versus actual preservation spending for the last five years |
| Accounting: additions and improvements capitalised; preservation costs expensed; no depreciation | The register's class flag for modified-approach infrastructure and the capitalisation policy for improvements versus preservation |
| A/P ref | Description | Class | Location | Amount | Decision |
|---|---|---|---|---|---|
| AP-88213 | Haas VF-2 machining center | Machinery and equipment | Plant 1 | 61,750.00 | Post |
| AP-88240 | Dell R760 server (2) | Computer equipment | HQ / IT | 18,420.00 | Post |
| AP-88251 | Repair, conveyor motor | 2,140.00 | Expense, not capital | ||
| AP-88266 | Office chairs (24) | Furniture and fixtures | HQ | 9,600.00 | Post as one asset |
What to record on the asset.
- The capitalization threshold in force, by class, and the date the policy was adopted.
- For federally funded equipment, the award and the $10,000 unit test.
- For infrastructure under the modified approach, the network, the condition rating and date, and the established condition level.
- Whether a cost is an improvement (capitalised) or preservation (expensed), with the policy criterion applied.
- Aggregated purchases below the threshold that are capitalised as a group, and why.
In Fixed Asset Desk: infrastructure under the modified approach is a class held at cost with no depreciation, and fund, function and activity sit on every asset; the government page describes the register for a public body.
Sources: GASB Statement No. 34, paragraphs 18 to 25 (capital assets and the modified approach) and 116 to 120; GFOA best practice, Capitalization Thresholds for Capital Assets (approved 6 February 2006); 2 CFR 200.1 (2024 revision, effective for awards issued on or after 1 October 2024). Checked 20 September 2026.